(The author is a Reuters market analyst. The views expressed
are his own.)
By Gerard Wynn
LONDON, March 27 The European Union lags the
United States in developing shale gas but leads it on safety - a
cautious approach that may pay off in averting the sort of
environmental backlash that's scuppered the best laid energy
plans in the past.
This approach ultimately could lead to greater production of
European shale gas than otherwise, if it stops countries from
joining France and Bulgaria in banning exploration.
In the United States, green groups have increasingly
criticised the burgeoning shale gas industry for possible
groundwater contamination, lack of transparency, wastewater
disposal and truck movements.
That has prompted some regulatory response, with the
Environmental Protection Agency probing possible violation of
pollution laws and groundwater contamination.
U.S. President Barack Obama confirmed in January his
administration would draft rules requiring companies to disclose
chemicals used on public lands during the fracking process, in
which liquids are blasted into rock deep underground to release
pockets of gas.
The EU legal framework gives regulators more opportunity to
scrutinise projects before they get off the ground. Natural
resources are owned by the state rather than by private
individuals, forcing developers to request a permit to explore.
In both Europe and the United States, in any event, the
wisest approach may be to tap the resource cautiously, taking
account of all the risks.
In that way, the industry may head off the kind of protests
that have successfully stopped projects in nuclear power (on
radiation fears), onshore wind (landscape blight), carbon
capture and storage (CO2 leaks) and coal (CO2 emissions and
local air and water pollution).
Besides tougher rules, Europe's smaller reserves and
differences in property rights laws mean that shale gas
development will be less than in the United States.
So far, the EU has only 31 test drills (22 in Poland, three
in Britain and six in Germany) compared with tens of thousands
of operating wells in the United States.
Estimates of Polish reserves were sharply downgraded last
week, knocking the country off the top spot of EU shale gas
Four existing EU directives apply to shale gas, none
specifically written to target the sector. The European
Commission says the existing laws are adequate for the present
exploration phase and that it has no plans to write regulation
tailored for shale gas.
Those laws force projects to obtain a permit after
conducting an impact assessment, while other rules require
disclosure of fracking chemicals and protection of groundwater
and water catchments.
Regarding disclosure, EU regulation of chemicals
("Registration, Evaluation, Authorisation and Restriction of
Chemicals" - REACH for short) forces transparency on chemical
use and is being phased in over a decade from 2007.
Under REACH, developers have to disclose fracking activity
to their chemical suppliers, who in turn tell the European
chemicals agency (ECHA).
As of last autumn no fracking activity (using common
fracking chemicals) was logged with EU authorities, officials at
the environment arm of the European Commission told Reuters.
While that could be because of a breach in the rules, it is
more likely because of the small scale of activity and the
gradual phase-in of the regulation.
The rules at present apply only to the most hazardous
substances or to suppliers individually making or importing more
than 1,000 tonnes of a chemical annually.
By 2018 the threshold will fall to just 1 tonne, which should
capture all use of fracking fluids, with penalties for
non-disclosure. Members of the public will be able to access a
The Environmental Impact Assessment (EIA) process adds a
permitting hurdle that developers don't face in the United
States, where they can buy an exploration lease from private
owners of land and mineral rights.
In Europe, the state owns the resource. Members of the
public have the right to express an opinion on a permit request,
and even where this is granted the public or environmental
groups can challenge its legality at the national level.
In other rules, the Mining Waste Directive defines fracking
fluid as waste, which means companies have to clean up spills
and obtain permits for treatment of flowback water (used
fracking fluids returned to the surface), while the Water
Framework Directive requires member states to monitor surface
and groundwater for contamination.
British company Cuadrilla says it has already posted online
the chemicals it used at the one well it has fracked so far,
confirming that these were below REACH thresholds.
Such early, voluntary compliance makes sense, given that the
public in Europe may be even more jumpy about fracking than in
the United States. In addition to outright bans in some
countries, Britain ordered a suspension following a
mini-earthquake in northwest England, attributed to Cuadrilla.
(editing by Jane Baird)